Don't delude yourself about why you're sending your children to private school

Janet Murray's article tries to suggest that liberal beliefs are a naive fairy tale which collapse on impact with the brutal truth.

If you follow me on Twitter you may already have seen me go into Hulk-smash mode about Guardian education writer Janet Murray’s article,“Why I sent my child to a private school.” Here’s my (slightly) more reasoned response:

Firstly, I won’t scold individual parents deciding they want to go private. I’m sure at least some of my friends will go down that route and, though I may disagree, I’m not going to lecture them at one of those Islington dinner parties us strawman liberals are alleged to attend every weekend. I know there are situations — for example extreme bullying, behavioural issues or unusually poor teachers — that might lead some parents to decide that their current school isn’t working. Just have the decency not to pretend that you’re taking a brave stand against an overwhelming tide of left-wing militancy that doesn’t actually, y’know, exist.

Murray’s article is a classic mugged-by-reality conversion tale, like the recurring Daily Mail story where a repentant vegetarian poses happily with a bacon sandwich and makes jokes about lentils. In this narrative a liberal belief is a naive fairy tale that collapses on impact with the brutal truth. Or at least this one starts out that way. By the sixth paragraph she’s admitting “deep down I don’t think I ever really had a problem with private education”. By the tenth she’s approvingly quoting free-market hardliner Niall Ferguson. She isn’t abandoning a principle because she never held it in the first place. If her opinions were so flimsy and easily led back then, I’m not sure why we should listen to her new ones now.

The worst thing about Murray’s article is that she extrapolates her personal experience into a celebration of private schools and an attack on state ones. It’s an insult to the teachers, the children and the parents at those institutions. One thing defensive private school parents always say is that they want the best for their kids, the inevitable implication being that anyone chooses a state school doesn’t — that there could be no earthly reason why anyone who could afford a private school wouldn’t choose one. Well, it’s called principle. A weird concept, I know. Some people actually (a) trust state schools to educate their kids, (b) think that a school that reflects its environment, rather than being stuffed to the gills with wealthy white kids, might have social advantages, and (c) think that the private system is an indefensible means of cementing privilege.

I attended a private school, on hugely reduced fees, as did my oldest friend. I’m grateful for the education it gave me.  It had some excellent teachers who cared deeply about their pupils. It also had layers of class snobbery which made me sick, no girls until sixth-form and so few non-white pupils that I can still name all of them. But my experience is irrelevant. Purely on principle — that word again — I think the system should be abolished, or, more realistically, lose the charitable status which means the taxpayer funds them to the tune of £100 million a year. Contra Murray, it is far and away the major obstacle to class mobility and equality of opportunity in Britain.

My daughter goes to a local state school. It happens to be a church school but there was no “lying or cheating” (Murray again) involved. We said we weren’t religious; they let our daughter in anyway; it happens sometimes. So far, the school has handily disapproved all of Murray’s smears on the state sector. It has a strong discipline, high standards and attends to each pupil’s individual needs. It’s not the kind of beacon high achiever that drives up house prices and causes middle-class nervous breakdowns during application season, but it’s a fine school with a tremendous sense of community and inclusiveness. The society inside that school is the same society I walk through to get there every morning and, despite many obstacles, it works.

Despite her initial protestations, I don’t believe Murray was ever remotely left-wing. She speaks the language of the pure market, where you choose a school like you choose a childminder or a masseuse. “Until local schools meet families’ needs and cater for each individual child, can you blame people for putting their hand in their pocket?” Yes, I can actually, because if you are raised by well-educated parents who value reading and learning then, congratulations, you are already privileged. Every state-school teacher I know says that the bright middle-class kids, except in very unusual circumstances, are bound to do well. The ones that might benefit from a private education are the ones (a few scholarships and assisted places aside) who don’t stand a chance in hell of getting one. A socially mixed school, instead of a ghettoised one, benefits every pupil.

Murray has the gall to suggest she is doing less privileged kids a favour by freeing up a space, whereas in fact she is simply withdrawing herself from them and leaving them to their own devices. In London, where different social classes live cheek by jowl, this feels like a particular betrayal: I’ll live down the street from you but there’s no way I’ll let my kids attend the same school as yours. Of course, state schools could be better — they always can — but their chances are hurt if affluent middle-class parents won’t even consider them an option.

In an excellent recent Times piece (sadly paywalled) calling for the withdrawal of charitable status, Matthew Parris examined another motive for private education beyond mere performance:

I maintain that the reasons many parents choose to pay for private education are a tangle between educational and social ambitions, and these are not the same. You’d want a child, I’d want my child, to learn the relaxed and breezy confidence, the loose manner, the intangible sense of entitlement, that comes with a good private education in Britain. There does exist a ruling class in Britain and you’d want your child to join it.

This is not education, but privilege. The purchase of an expensive education is, in part, the purchase of privilege; the social advantage of your child over other children. I am not persuaded that this is the “public benefit” that our definition of a charity requires it to offer. And I dismiss out of hand the hoary old argument that private schools save taxpayers the cost of educating pupils in state schools. You might as well claim charitable status for your car on the grounds that it saves local authorities the cost of subsidising your seat on the bus.

I think he’s nailed it. “Five years ago, if someone had told me I’d have a child at private school, I’d have laughed,” writes Murray. “I’d have said I resented parents buying privilege through private education.” Well she may not resent it anymore but that’s exactly what she’s done. By using the cowardly argument that private schools only thrive because of the failure of the state system, she is pretending she had no choice, but of course she did. We all do. Having made those choices, the least we can do is be honest about them.

This post appears at 33 Revolutions Per Minute, under the title "Private schools, privilege and "liberal" conversion narrative".

 

Buying privilege? A pupil at Eton. Photo: Getty

Dorian Lynskey is a journalist living in London. He blogs at:

33RevolutionsPerMinute.wordpress.com

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We're racing towards another private debt crisis - so why did no one see it coming?

The Office for Budget Responsibility failed to foresee the rise in household debt. 

This is a call for a public inquiry on the current situation regarding private debt.

For almost a decade now, since 2007, we have been living a lie. And that lie is preparing to wreak havoc on our economy. If we do not create some kind of impartial forum to discuss what is actually happening, the results might well prove disastrous. 

The lie I am referring to is the idea that the financial crisis of 2008, and subsequent “Great Recession,” were caused by profligate government spending and subsequent public debt. The exact opposite is in fact the case. The crash happened because of dangerously high levels of private debt (a mortgage crisis specifically). And - this is the part we are not supposed to talk about—there is an inverse relation between public and private debt levels.

If the public sector reduces its debt, overall private sector debt goes up. That's what happened in the years leading up to 2008. Now austerity is making it happening again. And if we don't do something about it, the results will, inevitably, be another catastrophe.

The winners and losers of debt

These graphs show the relationship between public and private debt. They are both forecasts from the Office for Budget Responsibility, produced in 2015 and 2017. 

This is what the OBR was projecting what would happen around now back in 2015:

This year the OBR completely changed its forecast. This is how it now projects things are likely to turn out:

First, notice how both diagrams are symmetrical. What happens on top (that part of the economy that is in surplus) precisely mirrors what happens in the bottom (that part of the economy that is in deficit). This is called an “accounting identity.”

As in any ledger sheet, credits and debits have to match. The easiest way to understand this is to imagine there are just two actors, government, and the private sector. If the government borrows £100, and spends it, then the government has a debt of £100. But by spending, it has injected £100 more pounds into the private economy. In other words, -£100 for the government, +£100 for everyone else in the diagram. 

Similarly, if the government taxes someone for £100 , then the government is £100 richer but there’s £100 subtracted from the private economy (+£100 for government, -£100 for everybody else on the diagram).

So what implications does this kind of bookkeeping have for the overall economy? It means that if the government goes into surplus, then everyone else has to go into debt.

We tend to think of money as if it is a bunch of poker chips already lying around, but that’s not how it really works. Money has to be created. And money is created when banks make loans. Either the government borrows money and injects it into the economy, or private citizens borrow money from banks. Those banks don’t take the money from people’s savings or anywhere else, they just make it up. Anyone can write an IOU. But only banks are allowed to issue IOUs that the government will accept in payment for taxes. (In other words, there actually is a magic money tree. But only banks are allowed to use it.)

There are other factors. The UK has a huge trade deficit (blue), and that means the government (yellow) also has to run a deficit (print money, or more accurately, get banks to do it) to inject into the economy to pay for all those Chinese trainers, American iPads, and German cars. The total amount of money can also fluctuate. But the real point here is, the less the government is in debt, the more everyone else must be. Austerity measures will necessarily lead to rising levels of private debt. And this is exactly what has happened.

Now, if this seems to have very little to do with the way politicians talk about such matters, there's a simple reason: most politicians don’t actually know any of this. A recent survey showed 90 per cent of MPs don't even understand where money comes from (they think it's issued by the Royal Mint). In reality, debt is money. If no one owed anyone anything at all there would be no money and the economy would grind to a halt.

But of course debt has to be owed to someone. These charts show who owes what to whom.

The crisis in private debt

Bearing all this in mind, let's look at those diagrams again - keeping our eye particularly on the dark blue that represents household debt. In the first, 2015 version, the OBR duly noted that there was a substantial build-up of household debt in the years leading up to the crash of 2008. This is significant because it was the first time in British history that total household debts were higher than total household savings, and therefore the household sector itself was in deficit territory. (Corporations, at the same time, were raking in enormous profits.) But it also predicted this wouldn't happen again.

True, the OBR observed, austerity and the reduction of government deficits meant private debt levels would have to go up. However, the OBR economists insisted this wouldn't be a problem because the burden would fall not on households but on corporations. Business-friendly Tory policies would, they insisted, inspire a boom in corporate expansion, which would mean frenzied corporate borrowing (that huge red bulge below the line in the first diagram, which was supposed to eventually replace government deficits entirely). Ordinary households would have little or nothing to worry about.

This was total fantasy. No such frenzied boom took place.

In the second diagram, two years later, the OBR is forced to acknowledge this. Corporations are just raking in the profits and sitting on them. The household sector, on the other hand, is a rolling catastrophe. Austerity has meant falling wages, less government spending on social services (or anything else), and higher de facto taxes. This puts the squeeze on household budgets and people are forced to borrow. As a result, not only are households in overall deficit for the second time in British history, the situation is actually worse than it was in the years leading up to 2008.

And remember: it was a mortgage crisis that set off the 2008 crash, which almost destroyed the world economy and plunged millions into penury. Not a crisis in public debt. A crisis in private debt.

An inquiry

In 2015, around the time the original OBR predictions came out, I wrote an essay in the Guardian predicting that austerity and budget-balancing would create a disastrous crisis in private debt. Now it's so clearly, unmistakably, happening that even the OBR cannot deny it.

I believe the time has come for there be a public investigation - a formal public inquiry, in fact - into how this could be allowed to happen. After the 2008 crash, at least the economists in Treasury and the Bank of England could plausibly claim they hadn't completely understood the relation between private debt and financial instability. Now they simply have no excuse.

What on earth is an institution called the “Office for Budget Responsibility” credulously imagining corporate borrowing binges in order to suggest the government will balance the budget to no ill effects? How responsible is that? Even the second chart is extremely odd. Up to 2017, the top and bottom of the diagram are exact mirrors of one another, as they ought to be. However, in the projected future after 2017, the section below the line is much smaller than the section above, apparently seriously understating the amount both of future government, and future private, debt. In other words, the numbers don't add up.

The OBR told the New Statesman ​that it was not aware of any errors in its 2015 forecast for corporate sector net lending, and that the forecast was based on the available data. It said the forecast for business investment has been revised down because of the uncertainty created by Brexit. 

Still, if the “Office of Budget Responsibility” was true to its name, it should be sounding off the alarm bells right about now. So far all we've got is one mention of private debt and a mild warning about the rise of personal debt from the Bank of England, which did not however connect the problem to austerity, and one fairly strong statement from a maverick columnist in the Daily Mail. Otherwise, silence. 

The only plausible explanation is that institutions like the Treasury, OBR, and to a degree as well the Bank of England can't, by definition, warn against the dangers of austerity, however alarming the situation, because they have been set up the way they have in order to justify austerity. It's important to emphasise that most professional economists have never supported Conservative policies in this regard. The policy was adopted because it was convenient to politicians; institutions were set up in order to support it; economists were hired in order to come up with arguments for austerity, rather than to judge whether it would be a good idea. At present, this situation has led us to the brink of disaster.

The last time there was a financial crash, the Queen famously asked: why was no one able to foresee this? We now have the tools. Perhaps the most important task for a public inquiry will be to finally ask: what is the real purpose of the institutions that are supposed to foresee such matters, to what degree have they been politicised, and what would it take to turn them back into institutions that can at least inform us if we're staring into the lights of an oncoming train?